Example 1: Employer X maintains a calendar year SEP. The eligibility requirements under the SEP are: an employee must perform service in at least three of the immediately preceding five years, reach age 21 and earn the minimum amount of compensation during the current year. Bob worked for Employer X during his summer breaks from school in 2011, 2012 and 2013, but never more than 34 days in any year. In July 2014, Bob turned 21. In August 2014, Bob began working for Employer X on a full-time basis, earning $30,000 in 2014. Bob is an eligible employee in 2014 because he has met the minimum age requirement, has worked for Employer X in three of the five preceding years and has met the minimum compensation requirement for 2014.

Example 2: Employer Y designs its SEP to provide for immediate participation regardless of age, service or compensation. John is age 18 and began working part-time for Employer Y in 2014. John is an eligible employee for 2014.